ECON 203 - Case Study

case study

I. Table of Contents

I. Table of Contents ……………………………………………… 1

II. Summary of Article ……………………………………………… 2

III. Concepts from Microeconomics Applied to Article …………. 4

A) Monopolies vs. Perfect Competition…………………… 4 B) Natural Monopolies……………………………………… 4 C) Price Discrimination……………………………………… 5 D) Price Controls for a Natural Monopoly……………… 5 E) Picking an Output Level………………………………. 6

IV. Analysis of Paper ……………………………………………….. . 7

V. Works Cited ………………………………………………………. 8

II. Summary of Article

In a recent article written by Chris Moran titled “Why New Fiber Networks are Required to Shatter Monopolies of Comcast and Other ISPs” (Moran, 2013), the author commiserates with consumer’s financial frustrations that are stemming from monopolistic cable companies. Moran explains that the cable monopolies have come to exist as a result of outdated regulations that force a certain company upon a consumer based on their zip code. The article proclaims that with the introduction of fiber-optic networks, these monopolies may finally shatter.
Moran’s article correspondingly references an editorial that was written by Christopher Lee, published in the Washington Post, which focuses on how cable companies are able to maximize their profits (Lee, 2013). Moran’s article highlights Lee’s core argument, which is that cable providers are engaging in price discrimination. Basically, by offering different tiers of service, with radically different speeds, a cable provider is able to maximize their profits. The majority of a cable company’s customers are going find the higher priced tiers, with the much faster performance speeds, much more attractive than the lower priced packages with the much slower broadband speeds.
Lee’s article compares cable television to the wireless